What is a corporate bond?

A corporate bond is a type of financial instrument that companies issue in order to raise funds. It is essentially a loan that an investor makes to a company in exchange for a fixed rate of return. The investor receives regular interest payments, typically on a semiannual basis, and receives the original investment back when the bond matures. In New Hampshire, there are several types of corporate bonds, including those issued by non-profit entities, government entities, and publicly traded companies. The terms and conditions of each bond issue vary, but generally the issuer agrees to pay interest at pre-determined intervals in exchange for the money. Investors in corporate bonds receive a higher rate of return than they would with other types of bonds, such as treasury bonds. The return is higher because the company is taking on greater risk. Corporate bonds can also be used as collateral for borrowing by the issuer. Corporate bonds may also be traded on the secondary market, making them more liquid than other types of bonds.

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